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Huawei, the embattled China-based telecom equipment maker, is back in the news. But unlike the string of headlines that cast the company in a poor light over U.S. government fears that its networking gear might include back doors that enable cyber-spying, the latest news seems less sinister.
Huawei has announced that it will unveil its flagship smartphone, the Ascend P6, in London. That device, Huawei said, will compete directly with Apple’s iPhone and Samsung’s Galaxy S4.
The trouble for Huawei has never been selling phones. As of this writing, the company has twice the market share of Apple in China and has been performing quite well in various parts of Asia. The trouble for Huawei has been appealing to Americans. For years now, it has tried to break into the U.S. market with several different technologies, but as its recent fight with U.S. lawmakers has shown, it’s a far more difficult task than expected.
U.S. suspicions about Huawei’s intentions means that it’s likely the Chinese telecom company will never be a big player in the U.S. mobile market. Here are the reasons why its chances could only get worse.
1. Lawmakers have attempted to discredit its intentions
Last year, Huawei said that it was hoping to increase its presence in the United States by launching smartphones and offering other telecom networking equipment to U.S. customers. But there was a problem: U.S lawmakers balked at the idea, saying that they didn’t trust that Huawei hadn’t designed its equipment to make it easier to spy on Americans and corporations. The lawmakers, alone, might prove to be too powerful for Huawei to ever make a splash in the United States.
2. Consumers would be wary
Even if Huawei managed to get is smartphone products onto store shelves in the United States, the chances are that consumers wouldn’t buy those devices because of concerns about security and Huawei’s corporate ethics. After watching U.S. lawmakers rake the Huawei name over the coals about security concerns, many consumers will likely find it hard to trust even their smartphone designs.
3. Enterprise customers would be even more concerned
Potential enterprise customers are already on their guard after the U.S. government served notice that it didn’t want to hear about major U.S. telecom companies installing Huawei’s equipment in their network. What makes anyone think that the corporate world would respond favorably to Huawei entering the smartphone market? Enterprise users are notorious for their fears of spying and security and if the lawmakers were right, Huawei mobile devices would be one major threat.
4. No-names don’t succeed
Looking at the U.S. smartphone market, companies that haven’t established a big market presence or don’t have major brand names—such as Apple or Samsung—tend to fall by the wayside. LG, HTC and BlackBerry have somewhat respected names, and yet, they’re failing in the United States. How would a company named Huawei perform? Yeah. Not that well.
Huawei Won’t Be a Big Player in the U.S. Mobile Market: 10 Reasons Why
5. It would be untenable to work with Huawei
If Huawei delivered smartphones to the United States, it currently seems unlikely that many North American mobile carriers would actually stock its smartphones. The carriers already have plenty of different device models to offer customers. Why would they want to become ensnared in national security worries just to offer one more smartphone brand? The chances are no carrier would partner with Huawei on its devices.
6. Its best customers are leaving
Let’s not forget that Huawei does more than just build smartphones. In fact, the company’s main business is telecom gear. Now its best U.S. customer, Level 3 Communications, is reportedly looking to move on to another provider. If Huawei’s best U.S. customer is leaving, what makes anyone think it’ll succeed in other telecom market segments?
7. The smartphones are solid, but not groundbreaking
Huawei’s smartphones are certainly nice products with sound features that would put them in strong contention with mid-range devices, but to say that the company is a true competitor to Apple and Samsung worldwide is laughable. For now, Huawei’s devices have proven to be solid, but not groundbreaking. And until it can do something groundbreaking, Huawei wouldn’t have a chance in the United States.
8. The end-to-end game plan doesn’t work in the U.S.
Huawei’s success has been due in large part to its ability to deliver full end-to-end product lines in markets around the globe. What that means is that the company is delivering everything from the smartphones on up to the network technology that the phones connect to. In the United States, controlling the entire cell phone environment wouldn’t work with regulators, making the company’s business model unworkable.
9. It’s unproven outside of China
Despite attempts to expand its smartphone operation outside of China and Asia, Huawei’s efforts haven’t proven fruitful. Huawei is definitely a force to be reckoned with in China, but elsewhere around the world, it’s yet to prove that it understands Western consumers. Huawei hasn’t demonstrated that it can appeal to consumers in both markets even if it were given the chance to compete in the United States.
10. Who knows how China’s government will respond?
There’s another issue at play that hasn’t been considered: how will China’s government respond not only to Huawei’s attempts to move into the United States, but also the way the company has been treated by lawmakers? As we’ve seen, China’s government has an inordinate amount of power over Chinese enterprises. However, any involvement on the part of the Chinese government would hurt Huawei and its relations in the United States. Since China seems to have so much interest in the United States, it would seem more than possible for the government to get involved in some way. In other words, it’s a powder keg and nobody likes to be close to something that might blow up in their face.
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